Understanding Shariah finance and Islamic banking in American finance

by Allyson Rowen Taylor

February 23, 2011 | 1:12 pm

The Middle East, with its exotic tropical sirocco winds, is also now the haven and leader of a new form of finance that is enticing the world with the alluring scent of its petrodollars. Substantial profits are to be made, and gold plated Bentleys, mansions on the Palm Jumerah Island, and golf courses designed by Tiger Woods only add to the mystique behind the veils. However, more than Dubailand and dreams of riches lurk behind the Islamic ideologues who invented the concept of Islamic Finance, and they are ones who are promoting this form of “interest-free, Muslim friendly, ethical investment” worldwide.

From behind the walls of opulent palaces and banks, there are many people with militant backgrounds who are seeking to promote this new type of religious finance to spread a form of militant Islam throughout western civilization. That militancy, they believe, can be financed by co-opting American financial institutions. Many in this movement wish to replace traditional western capital systems with Islamic economic values.

Islamic Finance was conceived by the Muslim Brotherhood in Egypt in the 1920s. Decades later, it is a viable modality for spreading the Islamist movement of Jihad against the West.

To understand the concepts of Shariah one needs to understand and the doctrines that Shariah compliancy commands. Strict Shariah adherence is the sole criterion of whether a financial institution can be deemed “Islamic.” When HSBC, Citibank, or Deutsche Bank open “Islamic Windows” those are not just another place to deposit money. The banking operation must adhere to constants common to all Islamic banking institutions.

One is that the operation must adhere to the tenets of Shariah Law. However, when perusing the brochures or prospectuses sent out by the institutions, there is very little that explains the real meaning to the layperson. The advertisements usually gloss over the objectionable religious details and just refer to “ethical investment, interest-free, and an obligation to the alms giving, or zakat.” This seems innocent enough, but like the hidden face behind the veil, more information is needed for the investor, both Muslim and non-Muslim.

The lack of full disclosure and due diligence in presenting this new form of banking is no coincidence. It is being done to lure investors from all walks of life who want to share in the glow of banking and borrowing “interest free and ethically.” It is meant to draw not only from the Muslims who adhere to the laws of the Koran and Shariah, but to everyday people who think that banks are thieves, and this is a way to “beat the system.”

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Western institutions that offer Islamic finance are in a conundrum, especially in America, often failing to disclose what Shariah really is. The question is, why? One reason is ignorance, or being politically correct in a post 9/11 world. The other answers are still unknown. That is why monitoring and following the growth of Shariah-compliant investments and banking is so important. For critics of Shariah Finance, it is a bit like being a “Paul Revere,” trying to ring the bell of freedom to warn investors.

The true agenda of Shariah and Islamic Finance is really just a means to bring this type of movement of Islam into the West, and especially, the “great Satan” America. As this economic system creeps into the threads of capitalism, it may eventually change the way we live. Not a few see it as part of the international campaign to legitimize Shariah Law among those who would never adopt it.

Banking compliant with Shariah law is more than just abiding by ethical rules and regulations, combined with interest-free loans. It supposedly resonates with how life is lived in Saudi Arabia and Iran. Understanding the objectives of Islamic banking by the words of the Shariah Scholars themselves suddenly brings our own financial institutions into compliance with a lifestyle anathema to the west.

Quoting from Nassar M. Suleiman, Corporate Governance in Islamic Banking, the law states: “Shariah Law must develop a distinctive corporate culture, the main purpose of which is to create a collective morality and spirituality which, when combined with the production of goods and services sustains the growth and advancement of the Islamic way of life.”

The authoritative Shariah compendium of the Shafii School of Jurisprudence, which is a cornerstone for understanding Shariah, is the “The Reliance of the Traveler: The Classic Manual of Sacred Law.” For example, this book states on family law:

1. A woman is eligible for only half of the inheritance of a man
2. A virgin may be married against her will by her father or her grandfather
3. An Arab woman may not marry a non-Arab man
4. A woman may not leave the house with her husband’s permission
5. A Muslim man may marry four women, including Christians and Jews, a Muslim woman can only marry a Muslim
6. Beating an insubordinate wife is permissible

The book states on jihad:

1. Offensive Military jihad against non-Muslims is a religious obligation
2. Apostasy from Islam is punishable by death without trial
3. Non-Muslim subjects of a Muslim state are subject to discriminatory (dhimmi) laws.
4. It is permissible to bribe (Da’wah) non-Muslims to convert them to Islam
5. Lying (Taqiyya) to infidels in time of Jihad is permissible.

The book states on human rights:

1. Homosexuals and lesbians must be killed
2. Slavery is permitted and legitimate, as in Darfur
3. A Muslim man has unlimited sexual rights over slave women, whether they are married or not
4. Female sexual mutilation (cliterectomy) is obligatory
5. Adultery is punished by death by stoning
6. A woman’s testimony in court is worth only half that of a man, and only in cases involving property.

Shariah plays a huge part in Islamic Finance and according to Islamic scholars, Shariah is simply “God-ordained sacred Islamic Law that rules each and every aspect of a Muslim’s life.” The tenets of Shariah are immutable, not subject to any change or interpretation, and valid for all times and places. This ideology is entering our financial system.

Many people think that Shariah Finance in America is a runaway train that cannot be stopped. However, with our own due diligence we can require banks to become compliant to the American way and not the Shariah way.

Allyson Rowen Taylor writes for Shariahfinancewatch.org. She speaks nationally on the influence of Shariah on the banking and financial systems.

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